30 yo, software professional, what's my next move?

[conwy]

So, my current situation:

Age: I'm 30½.

Job: Been doing software development contracting at a very wide range of companies for the past ~10 years. Lately my career is moving from pure software development/engineering into a broader development-design practice with some aspects of consulting as well.

Education: I originally studied Programming at a vocational college about 15 years ago. More recently (this year) I finished off a Grad Cert in Interaction Design at fairly well-regarded university and have been incorporating Design Thinking, UX, etc into my recent work.

Income: I make pretty decent bank ($AUD200k+) and I live extremely frugally and generally save about 70-75%+ of what I earn.

Savings: My current total savings is about $AUD500k. (Been working and saving hard for 10 years.) I currently have the money spread across savings accounts and various index and bond funds, which my financial planner has set up. (I don't know if he's the best financial planner out there; he was referred to me by a recruitment agent who seems to have done well in his business affairs. The guy seems to know his stuff, and can explain anything I ask him in a way I can understand.)

Location: After getting a UK Visa, I've moved from Sydney to London, and for the last 6 weeks, have been working for a major corporation.

So these days, when I think about my career and future, I'm feeling a mixture of confidence/hope but also anxiety, mild frustration and "lost"-ness and I'd like to get people's thoughts on this.

On the confidence/hope side, it seems like I've saved up a lot, established myself in a solid career niche (software development and design) and somewhat educated myself, at least vocationally. I generally enjoy what I do (there are, of course, good days and bad days, but on the whole, I manage to enjoy myself and/or find ways to make it enjoyable). I would probably enjoy doing bit more design and maybe some more consulting-type activities, such as giving advice, managing relationships, setting businesses up with processes to ensure future success, etc. Or maybe management? Don't know how good a manager I'd make. I've been told a few times that I am good at teaching/mentoring, so maybe that's a good quality for a manager to have? I think I'd enjoy being a 'Product Manger', from what I've seen them do.

On the anxiety side: I realise worry isn't necessarily a productive emotion, but heck, it's what I feel. Particularly: I worry about the job market becoming increasingly competitive and my skills not making as much money in future. I feel I'm very good at what I do now, but I worry about being able to adapt and change if, say, over the next 10 years, there are way more software professionals on the market who can do what I do. That was part of the impetus for me moving toward design - I wanted to "stack" skills in a way that further differentiates me from competitors. I think that's worked out pretty well so far. My most recent position was won partly on the back of my UX design competencies.

On the frustration/overwhelmed side: I feel like I'm not "doing enough" to further my career, but I don't know what I should do, and I don't want to waste time/energy without some kind of return. I guess I'm a bit overwhelmed by the possibilities. Maybe I could make more money if I did public speaking. Maybe I could make more money if I got an MBA. Maybe I could make more money if I took a pay-cut to get certain prominent names on my C.V. Or maybe if I did a bit more networking, like attending events, etc. putting myself out there more. I'm kind of overwhelmed by the number of different directions I could take that I don't know where to begin. I feel like I'm floating around in a sea of opportunities, with nothing specific to grasp on to.

On the "lostness" side: I feel especially lost when it comes to investments. Ok, I have lots of cash. But what do I do with it? Is it enough to rely on my financial planner? Should I be taking a more active role in managing my money? But I know very little about finance and investment. So how/where do I learn? I've read/listened chunks of several books - Securities Analysis, Common Stocks Uncommon Profits - and listened to interviews and lectures on YouTube. (I'm more of an "aural" than a visual learner, strangely enough for someone whose job is to create attractive screens and visualisations!!) But I feel lost in it all. A lot of the advice seems to be relevant to a past era, where the investing landscape was different. E.g. there weren't as many value investors around when Warren Buffet was coming up as there are now. And can you trust books anyway? Just because someone wrote a book on something doesn't mean they're either correct, or have your best interests at heart, or are relevant to your situation. I don't know how one is supposed to "succeed" at investing, when there's no clear science to it, it's almost impossible to know who is right and who is wrong, and the field is constantly changing.

So to sum it all up (and sorry for how long this rant has taken!!):

I'm happy with where I'm at now, but a bit lost and confused about where to go from here.

So yeah, any thoughts, opinions, advice, ideas, inspiration, etc etc are most welcome. Thanks!

[slowtraveler]

Doing math, your expenses are 50k. At 500k savings, your withdraw rate is 10%. Great start but 3-4% is enough for a conscious FI (not blindly withdrawing 4% of initial principle each year because xyz said so). 2-3% and you're living on the cash flow so golden.

At your point, I'd work towards properly investing what you have, reaching a 2-4% wr, and moving towards work you love more since even when FI, life is about what makes you happy and some creative outlet is part of that. For me, it is learning and loving. Do you have a way to dip into managerial, design, other interests without taking the paycut so you can see whether you enjoy them or just the idea of them?

[conwy]

Sorry, not sure if I get what you mean by "withdraw rate", but I assume you're referring to my expenditure? So you're saying I should maybe lower my living costs? I think that would be a good idea. I'm currently working on reducing expenses on food and radically reducing my use of public transport.

I'd really enjoy the feeling of knowing every day that I don't need to go into work, and could just stop working and live at the same standard of living.

I guess one idea is to gradually transition toward the funnest possible work at the best possible rate, by, at each new contract, negotiating around skills vs. pay vs. opportunities to build new skills.

So I might take a 2% paycut for 5% more fun and 10% more skills-development. Over the long-run, if I keep that up, I'd end up being worth more, more highly paid and having more fun all at the same time! (Well, I'm being optimistic, but that would be the aim anyway!)

> Do you have a way to dip into managerial, design, other interests without taking the paycut so you can see whether you enjoy them or just the idea of them?

I think there are ways I could do that. What I generally do is a mixture of watching and observe what people are doing who are in these positions, particularly the language and tools, reading books about it and also kinda "just doing it" at work, without even asking permission.

My bosses these days seem to be much more OK with this than in the past. They generally are happy for me to do what they see as "extra work on top", as long as it moves the project forward, doesn't ruffle feathers and doesn't detract from my primary duties.

Occasionally I get into team leading by "just doing it", so I have 2-3 positions of leadership in my career history now, albeit not "management" roles per-se, but definitely involving aspects of management, like planning, estimating, allocating work, mentoring/developing people.

I definitely don't want to take a paycut for it though. My reasoning generally is: if I'm being paid less to do 'X', then by definition, 'X' isn't going to lead to more pay. I'm better off doing 'Y', which pays more, because there's generally a reason it pays more.

In my case, it seems like a chunk of development, a chunk of design and a dash of consulting & facilitation is what people want to pay me bucks for.

Actually, part of the puzzle here is perhaps myself. Meaning: it's one thing to think about "high paying jobs in general", but a whole different thing to think about "jobs that companies would pay ME a lot to do"!

In terms of happiness and creativity, I kinda enjoy what I do already. I enjoy jumping between coding, designing and getting a bunch of people around a whiteboard to envision a solution. It's really the perfect job in most ways. I also enjoy the big corporate environment. I feel I'm well adapted to it. I like having a big desk and going into the city to work. I tend to not enjoy smaller companies as much.

That said, I would welcome early retirement. It would be sweet to keep working, but to be able to drop out every now and then, for months at a time, safe in the knowledge that even if the worst happened, I'd have enough savings to just sit back and relax for a few months, and then maybe chase a rainbow.

[conwy]

At your point, I'd work towards properly investing what you have

But this is what's stumping me!

How do I "properly invest"? What specifically is the "work"?

Is it reading lots of books about investing and just, I guess, choosing which ideas I think are relevant? Do I 'experiment' somehow, maybe by investing small, safe amounts of money?

Here's the kicker: how does one ever really know whether an investment would pay off until it's too late? I.e. until one has already invested the money and found out the hard way?

It's never possible to be in a position, with relation to investing, where you understand the causal links between effort and result. You might have followed a strict method and carefully chosen investments, but you can't really know why those choices succeeded or failed, because there are so many variables that could have created the result, which you couldn't have known about.

You can look at a successful investor like Warren Buffet and try to pick apart his method, but you don't really know whether it was his method that got him the results or some combination of method and luck. You're looking at a winner. You're not seeing all the other millions of variations of Warren Buffett who were strict, disciplined, hard-working, etc, etc ,and got absolutely nowhere.

I just find the whole field of investing impossibly confusing.

It's different with career/work. With work I generally get a feel for what I should do, what the path is to success, and what the next steps are at any given point.

Whereas with investment, I don't have anything to grasp onto. It's just intangible numbers that I can't seem to make meaning out of.

[conwy]

Thanks for the encouragement.

I'll start working through that list then.

I started learning about financial accounting last night, that's starting to clarify some concepts for me.

[wood]

At your point, I'd work towards properly investing what you have

But this is what's stumping me!

How do I "properly invest"? What specifically is the "work"?
Is it reading lots of books about investing and just, I guess, choosing which ideas I think are relevant? Do I 'experiment' somehow, maybe by investing small, safe amounts of money?

The "work" as I see it is reading up on investing to learn what it's all about. You'll get many good book recommendations if you ask for them. You'll find basic recommendations on the ERE blog, and if I remember correctly also in the ERE book. The thing with investing is doing it in a way that compliments your personality. Investing may be risky. If you hate taking risks, you should pick a low-risk investing strategy. There are a number of strategies to choose from. Only by trying will you learn if it really suits you. What you don't want is having picked an investing strategy that keeps you up at night because you can't tolerate the risk you have taken on. Some strategies involve more continuous work than others (see next paragraph). Avoid strategies requiring lots of work if you don't like it.
If you hate learning about this stuff overall, I'd say your current solution is fine - it requires little effort from your side and there's a trusted professional managing your money. Changing this to doing it yourself should come with the expectation that you can make as much or more money, or lower the risk you are taking to a more comfortable level.

The next step in "work" has to do with paying attention to what you've invested in. This might involve staying up to date on relevant news, reading quarterly/annual reports from the companies/funds you've invested in, general paper work and dealing with taxes. You can spend a few hours per year on this with some strategies. With others, like daytrading, you can assign a full time job to it.

Here's the kicker: how does one ever really know whether an investment would pay off until it's too late? I.e. until one has already invested the money and found out the hard way?

One might describe investing as a way of taking bets. Investing, like bets, is based on probabilities because we have so many uncertainties. Learning how to invest is learning how to assess uncertainties.

It's never possible to be in a position, with relation to investing, where you understand the causal links between effort and result. You might have followed a strict method and carefully chosen investments, but you can't really know why those choices succeeded or failed, because there are so many variables that could have created the result, which you couldn't have known about.

You can look at a successful investor like Warren Buffet and try to pick apart his method, but you don't really know whether it was his method that got him the results or some combination of method and luck. You're looking at a winner. You're not seeing all the other millions of variations of Warren Buffett who were strict, disciplined, hard-working, etc, etc ,and got absolutely nowhere.

This is an interesting take on it. I'd say try to keep it simple. You can't know everything in advance. But to some degree, it is possible to explain why prices for something (stocks, oil, food etc) went up or down when you look in hindsight. Learn the difference between price and value. If something has way more value than what you pay for it, you are likely to make a good investment. Reading up on investing will teach you how to assess value. Value is oftentimes quite stable, whereas prices can be volatile leaving opportunities for bargains to be made. Of course there will be unknown factors and uncertainties in the total equation. In some cases more than in others. This is called risk, and reading up on investing will teach you about that too.

In the meantime it sounds like you've found a good solution leaving it all up to a professional you trust. Another option would be to invest your money in the safest way possible, with the aim of not losing money rather than aiming for big gains. This means putting your money in instruments like high interest bank accounts and bonds. This will not yield much and will require a higher networth in order to consider yourself FI. You could allocate something small to invest more experimentally while you read up.

[conwy]

Thanks for your thoughts wood. I think I'm beginning to develop a "mental model" of where I sit in relation to investment.

I think my current strategy of using a trusted professional is good for the time being.

It looks like my next step would be to simply learn as much as possible, which I kind of figured was the case already, and thus, which I've already started doing. So I think I'll steadily learn what I can, from well-regarded books, lectures, etc.

The third step, which I definitely don't want to rush into, is to act on the knowledge I have gained from my "learning" phase, by setting aside a portion of my money that I'm willing to risk losing, and managing that portion a bit more actively.

I think I'm generally pretty conservative, but I did have my financial planner put a good chunk of my money into a more "high growth" category of investments, because I'm willing to take short-term risk for long-term gain (with a 5-10 years horizon in mind), because I'm very confident that I can maintain a low cost of living and/or paid employment over that period.

I definitely want to continue reducing my costs. That seems like a good thing to do, which doesn't entail financial risk.

I'm seriously considering trying to even live practically for free - that would be ultimate security!!

[Scott 2]

What is the expense ratio on the funds your financial adviser is selling you?

Is there a load (commission) on the transactions? If so, what type?

Here's a guide to the types of fees you might see. They are another way to look at your relationship with the financial adviser:

https://www.nerdwallet.com/blog/investi ... ions-fees/


When I hired one, I found someone who was fee only. For about $600 USD, he got me over the initial hump of getting started. I declined to purchase the investments he sold however, due to high costs.

[slowtraveler]

On investing, we are a paranoid bunch around here so Bogle isn't on the reading list but I'd point you to read Berkshire Hathaway letter to shareholders, Buffet's will, and some of the old school John/Jack Bogle. Poor Charlie's Almanac is another good one but not focused only on investing. There are many ways to grow your money, all come with risk. Find one you feel comfortable with and understand. Do not invest in something you do not understand.

Even here, living on dividends from a globally diversified index fund would be considered safe and relatively tax efficient. Fwiw, that with an actively managed conservative income fund in my tax advantaged accounts is my portfolio.

[liberty]

You have done a very good job so far. Impressing that you already have 10 years work experience!

From your current rate, you can retire on 1,250 AUD/month with the conservative 3% safe withdrawal rate. Based on the history, you can take out 1,250 AUD/month forever without working. Congrats!

How expensive is the financial planner? I would fired him/her and managed the money on my own...

Will recommend to read the whitepaper The Trinity Portfolio by Meb Faber. Also his books Global Asset Allocation and Global Value are highly recommended.